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Taking Care of Business

There's no longer any countervailing power in Washington. Business is in
complete control of the machinery of government. If corporate America understood
its long-term interest, it would use this unique moment to establish in the
public's mind the principle that business can be trusted. But it's doing just
the opposite. Every industry and every major company is cashing in as fast as it
can while the good times last. The danger for business is profound.

Credit-card companies are getting a bankruptcy bill that will make it harder
for overstretched people who succumb to the companies' blandishments ever to get
out from under their debts. Energy companies are on the way to obtaining rights
to drill for oil and gas on Alaska's coastal plain. Cigarette manufacturers are
confident that the administration will drop the federal lawsuit against them.
Pharmaceutical companies will get longer patent protections and more federal
dollars. Big labor-intensive businesses will get rules that weaken unions.
They've already killed the Labor Department's "ergonomics" rule, which would have
protected workers against repetitive-stress injuries. Airlines with labor
problems can count on White House actions to ward off strikes. And so on.

In normal times, when business has to cope with political resistance in
Washington, its leaders have been forced to set priorities. There is only a
fixed amount of political capital to be expended. The Business Roundtable,
comprising the chief executive officers of the largest blue-chip American
companies, typically establishes at the start of a new Congress a legislative
agenda reflecting what its members consider to be the most important issues
facing them. It then coordinates its strategy with that of the U.S. Chamber of
Commerce, which has canvassed its mostly small and medium-size businesses to
determine their priorities. The National Association of Manufacturers then weighs
in with its wish list. And the National Federation of Independent Businesses,
composed of small concerns, sets its goals. These groups do not always see eye to
eye, but under normal circumstances they understand that legislative success
requires coordination. Separately, they lack the political clout to overcome
determined resistance by Democrats in one or both houses of Congress or by a
Democratic president.

The trade associations representing specific industries--pharmaceuticals,
hospitals, electronics, securities, oil-and-gas, for example--typically play
supporting and subordinate roles. Their own parochial legislative goals can't
interfere directly with the priorities of business as a whole because the
industries often have to depend on the larger business groups to be heard. Within
each industry, specific firms may retain their own Washington lobbyists, but
they, too, have to work with others in order to have significant effect.

Political resistance, in other words, forces the business community to decide
what's most important to it. Corporate America is made to exert some discipline
over itself. Business leaders are able to prevent or at least distance themselves
from excesses by any single company or industry that might otherwise taint
business as a whole in the minds of the public.

American business notably did not come to the aid of the cigarette
manufacturers when the lawsuits against them began several years ago. Nor has
corporate America as a whole fought on behalf of the drug companies or the gun
lobby. Labor and environmental rules with broad consequences typically become
high priorities for legislative attack, but not all of them. In the first
Clinton administration, the business community was quite happy to let the Labor
Department target apparel manufacturers and major retailers in its crackdown on
sweatshops. In fact, I recall a number of White House meetings in which the
leaders of major business organizations quietly assented to the administration's
plans to block subsidies flowing to a particular industry, or to impose new
clean-air rules on another industry, or to move aggressively with an antitrust
complaint.

But now that political resistance has vanished, the business community can no
longer discipline itself. Every business lobbyist on K Street is under enormous
pressure from clients to reap something from the new bonanza. Every trade
association must demonstrate to its members large returns from their investment
in getting an all-Republican business-friendly government. And the pressure only
ratchets upward: Every time one company or one industry receives its reward,
Washington lobbyists representing other firms or industries come under even more
pressure to score a victory.

Washington is awash in corporate IOUs, all waiting to be cashed in, and
George W. can't argue that the Democrats will block the payoffs. Under these
circumstances, the Bushies will find it next to impossible to maintain order.
Demands for regulatory relief will only grow louder, and most will be met.
Corporate welfare will flow ever more freely. Once the tax bill is open to
amendment, corporate tax breaks will blossom like the cherry trees.

At some point--perhaps as soon as the 2002 midterm elections, and surely no
later than the next presidential election--the public will be aghast at what is
happening. The backlash against business will be thunderous.

About the Author

Robert B. Reich, a co-founder of The American Prospect, is a Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. His website can be found here and his blog can be found here.